The time for a car loan to be approved varies depending on the lender, the type of loan, and the applicant’s financial circumstances. However, on average, approval times can range from a few hours to several days. These are some of the factors that may influence approval timelines.
Same-Day Approvals
Many lenders, particularly online financiers, offer same-day approvals. These lenders often utilise automated systems to assess applications quickly, provided the applicant has submitted all necessary documentation and meets the eligibility criteria.
This is especially common with pre-approved loans, where borrowers are assessed for a specific borrowing limit before selecting a vehicle.
Standard Approval (1-3 Business Days)
When it comes to more traditional lenders like banks and credit unions, the process might generally take one to three business days.
These institutions often perform more detailed manual reviews of applications, especially for applicants with complex financial situations. If the lender requires additional information, the timeline may extend further.
Delayed Approvals (Up to a Week or More)
In cases where the applicant’s financial history is complicated, or where the application is incomplete because of missing information or the like, approval times can take longer.
For instance, if the borrower is self-employed, or has a low credit score, or has inconsistent income streams, lenders may require further verification. This could include providing additional bank statements, tax returns, or proof of income.
How to Improve Approval Timelines
As an applicant, there are a number of things you can do to improve the approval timeline for a loan. For starters, the most basic thing is to ensure you provide all the necessary documentation about your financial circumstances, and the car being purchased. If you have a higher credit score, you also stand to benefit from an expedited process.
When it comes to the type of loan you are seeking, secured car loans often have faster approvals compared to unsecured personal loans. This is because the car is used as collateral and reduces risk to the lender. Speaking of which, online and non-bank institutions can often work with a faster turnaround than traditional banks.
Last but not least, consider car loan pre-approval. This enables a lender to assess your creditworthiness before choosing a car, in turn giving you a budget to work with in searching for a new car. This process will generally take just a few days, and also speeds up the final approval process once you have identified a car you’d like to buy.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.